Original Research

Challenges faced by CEOs in executing turnaround strategies in state-owned enterprises in South Africa

Morongwa Mpete, Christoph Maier
South African Journal of Business Management | Vol 55, No 1 | a4220 | DOI: https://doi.org/10.4102/sajbm.v55i1.4220 | © 2024 Morongwa Mpete, Christoph Maier | This work is licensed under CC Attribution 4.0
Submitted: 22 August 2023 | Published: 29 March 2024

About the author(s)

Morongwa Mpete, Graduate School of Business Administration, Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, South Africa
Christoph Maier, Graduate School of Business Administration, Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, South Africa

Abstract

Purpose: Building on theories of the firm, this research examines the challenges faced by chief executive officers (CEOs) in executing a turnaround strategy in the state-owned enterprises (SOEs) in South Africa.

Design/methodology/approach: This is a qualitative study conducted within 10 of the 21 SOEs classified as Schedule 2 (major public institutions) in the Public Finance Management Act (PFMA) that previously embarked on a turnaround. The study comprised 24 semi-structured interviews with CEOs, chief financial officers (CFOs), chief operating officers (COOs), boards, union representatives, regulators, and shareholders as the key players in a turnaround of a SOE. Thematic analysis was used to analyse data.

Findings/results: This research suggests that political landscape and power struggles, inappropriate practices of board, politicians and shareholders, inefficient internal operations, leadership instability, legislation and corporate governance hinder the execution of turnaround strategies in the SOEs. This research is consistent with public choice, agency and resource dependence theories.

Practical implications: State-owned enterprises need to be free from political interference to be able to turn around. Government, board, shareholders, communities, regulators, service providers and unions need to relook at how they portray the CEOs of SOEs, and rethink how they deal with them.

Originality/value: This research contributes to policy, theory, practice, economy and society by expanding the theories of the firm, capturing real-life challenges the CEOs of SOEs face in executing a turnaround strategy and solutions to tackle the challenges. A roadmap to assist SOEs in executing a turnaround strategy successfully is recommended.


Keywords

state-owned enterprise; CEO; turnaround; challenges; South Africa.

JEL Codes

G34: Mergers • Acquisitions • Restructuring • Corporate Governance; L32: Public Enterprises • Public-Private Enterprises; M10: General

Sustainable Development Goal

Goal 8: Decent work and economic growth

Metrics

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